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George Lin is Upbeat About Taiwan Motorbike Trade
2007/05/10
George Lin, the president of Taiwan Golden Bee (TGB) and a man who has developed a global vision through four decades of experience in the domestic motorcycle industry (which focuses mainly on motor scooters), is highly optimistic about the industry but fears that its window of opportunity might close if all of the local resources cannot be brought together to work for improvement within the next few years.
 | | TGB president George Lin: Mapping out a global strategy for the development of Taiwan`s motorcycle industry. |
TGB is Taiwan`s first and largest maker of continuous variable transmission (CVT) systems and parts, as well as a leading motorcycle manufacturer using big-bore engines that the company itself developed in cooperation with Morini Franco of Italy.
"No place else is positioned like Taiwan to develop the motorcycle line," Lin insists. "Taiwan has all the right conditions to develop this segment, including well-established central-satellite plant systems, strong R&D capability, and a mature industrial infrastructure supported by other industries. Japan offers a good example for us; motorcycle makers there stayed competitive despite increasing production costs by taking the lead in the upper-end and larger-displacement segment with unmatched design, development, and cost-control capabilities, and with the introduction of high-end, high-quality products that rivals in Europe and the United States were not producing.
"Our manufacturers have equally good competitiveness, and they can make the most of the small-volume, large-variety business model. Our motorcycle makers should take aim at their Japanese rivals and not get mired in segments of the industry that can easily be occupied by price-cutting rivals in emerging countries, especially China," Lin says.
He notes that Taiwan should make motorcycles that are marketable as well as having high quality, and that they should use the "5Ps and 2Ss" model: product, price, promotion, place, and partner, plus service and service parts.
The Global Industry
In analyzing the current status of the international motorcycle market, Lin notes that Japan is without doubt the world`s leading manufacturer and marketer, with brands such as Honda, Yamaha, Kawasaki, and Suzuki that have dominated world markets for years with unparalleled R&D, manufacturing, infrastructure, quality, market surveying and investigation, global marketing, and brand-imaging.
 | | A 400cc high-end ATV produced by TGB. |
Europe, he says, has lost global competitiveness because manufacturers there have focused on such factors as technical advancement and high-performance products that are sold primarily in the regional market rather than globally. This has resulted in small scale of production, high costs, and weakened competitiveness.
"Most of the European motorcycle brands have long and legendary histories, established brand images, and rich experience in product development," Lin goes on, "but in terms of quality, production, cost control, and sales and marketing they are not as good as their Taiwanese counterparts."
The TGB president explains that Taiwan`s motorcycle industry began booming about 40 years ago as it introduced technology from abroad (form Japan first, then Italy as well). A long period of stable growth in the domestic market, along with protective measures imposed by the government, provided a good environment for the development of complete-vehicle makers and their supply chains.
A number of challenges, however, remain to be overcome if Taiwan`s motorcycle and motorcycle parts makers are to play a more important part on the global stage. The first is a mature market for powered two-wheelers (PTWs) which has led to a decline in annual sales from a peak of one million units in 1995 to between 700,000 and 750,000 units today.
In addition, some of the island`s second-tier PTW manufacturers (including makers of all terrain vehicles (ATVs), buggies, karts, and other powersports vehicles) are still in the learning phase and are not yet fully adapted to the global competition posed by high-quality Japanese and European brands and low-price products from China.
More Problems
Another challenge, according to Lin, is that most makers of complete vehicles and parts in Taiwan are very good at manufacturing but, compared with major global brands, are inferior at product development, market surveying, marketing, after-sales services, and image promotion.
Another weakness of local complete-PTW makers is that in the past, most of them focused on the domestic market and were constrained by their foreign technical partners in exploring exports. This limited their R&D capability. This situation has changed in recent years, fortunately, and local manufacturers have been rolling out a steam of big-bore engines that they have developed themselves.
In mainland China, PTW sales began growing rapidly in the 1990s and the huge demand there-now the world`s largest market-has encouraged the entry into the industry of many producers which now have the advantage of strong cost competitiveness.
Lin says that the motorcycle industry and the motorcycle market in the mainland are both rural jungles with free-for-all competition among makers and sellers of copied, low-quality, low-cost products who offer no after-sales services. "Several years ago," he explains, "international buyers were very much attracted to China`s low-price motorcycles and parts, but now users of these `Made in China` products have been scared off by their poor quality and durability." The result is that most of the importers of Chinese PTWs, especially in third-world countries, have closed down because of quality and service problems.
India, by contrast, is a relatively good environment for making and selling motorcycle products, and the huge Indian market has attracted numerous international brands to set up production there.
Southeast Asia also has high potential, with the Association of Southeast Asian Nations (ASEAN) region expected to become the world`s second-largest motorcycle market, after China. That market, though, has long been dominated by the top-four Japanese brands.
Strategies for Development
Lin has ideas that, he believes, will help all of Taiwan`s companies in the motorcycle line to develop and take advantage of the lucrative market opportunities when the time is ripe.
"First of all," he says, "finding suitable foreign partners and setting up strategic alliances with them would be a good way to integrate and activate Taiwan`s resources. These partners would include companies with established global marketing capabilities, product-development abilities, sales channels, and well-known brand names."
Local manufacturers should also develop new engines more aggressively, he goes on. This is the key factor in Taiwan`s development of the powersports industry, "which includes the production of motorcycles, scooters, ATVs, go-karts, snowmobiles, watercraft (especially outboard engines), and agricultural and gardening machinery. This is the way that Honda followed."
Furthermore, the industry should promote the "Via Taiwan" concept under which Taiwan will pay the role of a bridge between the West and Asia, linking global buyers, markets and producers with the motorcycle industry in Asia (especially Taiwan, mainland China, and Southeast Asia), including producers, developers, and designers.
The "Via Taiwan" mechanism, Lin says, will link producers to markets, buyers to producers, designers and developers to producers, and central plants to satellite plants. "That," the president claims, "is what Taiwan can do, and do it best."
Another of Lin`s suggestions is to carry out resource integration among all related government agencies, research units, semi-official organizations (such as the Taiwan External Trade Development Council, or TAITRA), and private manufacturers. All of these sectors should cooperate to develop the local motorcycle industry into a globally competitive line and jointly map out an action plan to achieve that end within the next few years.
If these things are done, Lin concludes, Taiwan`s motorcycle industry will penetrate the global market like a flock of arrows. The overall industry will speed on its way like a large arrow and penetrate the target-the global market-while makers of complete vehicles will follow as medium-sized arrows each of which itself will be followed by a group of small arrows, which are the parts suppliers and satellite plants.
(by Quincy Liang)
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